Shares of major banks drop after Obama comments

NEW YORK (Reuters) - Shares of major banks tumbled on Thursday as President Barack Obama outlined proposed limits on the size and trading practices of big banks.

Obama said banks should no longer be allowed to own, sponsor or invest in hedge funds for proprietary profit. Proprietary trading has been a recent engine of earnings for major banks.

Shares of Goldman Sachs (GS.N), Citigroup (C.N) and Bank of America (BAC.N) lost more than 4 percent. Morgan Stanley (MS.N) dropped more than 7 percent, while JPMorgan Chase & Co (JPM.N) shed more than 5 percent. The Select Sector SPDR Financial ETF (XLF.P) was down 3 percent.

(Reporting by Wall Street desk; Editing by Kenneth Barry)